Study: Europe Not Ready For Internet-Based Supply Chain

Jan 13, 2005

Despite pressures from a unifying market, technology, and customer demand, European supply chains are not embracing Internet-based tools, according to a study by research firm International Data Corp. (IDC), Framingham, Mass. "Security issues dominate the underlying lack of enthusiasm," says Mirko Lukcs, European Services Expertise Center manager with IDC. "Another inhibitor is the fact that larger SCM [supply-chain management] buyers in Europe typically have to deal with a large amount of smaller companies in the supply chain that are not prepared to use the Internet instead of EDI as a primary business channel. Service providers on the other hand are eager to work on e-SCM, but have had to bow to buyer constraints." IDC believes the situation will change. When Europe gains momentum in the e-business revolution, and the barriers to Internet connectivity disappear, service providers will see a significant surge in SCM integration project demand, the company says. Key business drivers that have affected and changed the European SCM marketplace include:

Globalization and the European single market: The emergence of new channels and the changing market boundaries will make supply chains more complex.

Industry consolidation and alliances: Convergence among sectors and the increasing number of mergers and acquisitions among major players will increase competition.

Customer-centric or demand-driven supply chain: Consumers are driving the supply chain and are becoming the most powerful part of the supply chain, demanding increased product availability, delivery reliability, greater variety, and tailored solutions.

The Internet and business revolution: E-business has changed the way companies are doing business and has created completely different supply-chain needs.

IDC's report,
Internet Impact on Supply Chain Management Services, is for sale (reference IDC #PS03GB). It contains an analysis of observed market trends and SCM services market sizing and forecasts. It profiles the capabilities of 11 service vendors in Europe. Additionally, the report includes three independent case studies and discusses to what extent the Internet will affect SCM solution buyers and vendors in the future.